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21 Aug 2018
Dairy profits hit by high costs after rise in price of feed and labour
An increase in the milk price was wiped out by much higher costs last year, according to the latest Promar farm business accounts.
Meanwhile, the gap between top and bottom producers is everwidening, with those who focused on efficiency seeing profits 70 per cent higher than those who concentrated on yields.
Promar and its predecessors have been measuring dairy farm performance for 50 years.
The latest figures (largely for the year ending March 2019) are based on 520 herds with an average of 240 cows producing an average of 9,079 litres of milk per cow, 2.4 per cent more than in 2017/18.
Those farmers welcomed a 2.9 per cent increase in average milk prices, but this was wiped out by a 5.6 per cent increase in total costs, with feed and forage costs higher as a result of the 2018 drought.
As a result, average farm profit dropped £30,000 to £73,000.
Detail
According to Promar managing director Neil Adams, attention to detail, high herd health, efficient systems and quality forage helped the top 25 per cent reduce total costs by 28.2 per cent and deliver 9.6 per cent more milk per cow than the bottom quarter.
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The largest single performance difference was not in feed spend, but in labour costs, with the best spending £136 less on staff per cow than the worst.
While those with the most efficient performance in comparison to their variable costs may have delivered 28.3 per cent less milk per cow than the highest yielding, they spent 36.9 per cent less on bought-in feed.
“Feed costs may be lower this year, but then so is the milk price,” said Mr Adams.
“That makes competitiveness even more important and that only comes with good management.”
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